Tuesday, May 26, 2009

Step 9 to Abundance: Splitting Money to Pay Down Debt and Increase Savings

Okay, folks, we're about done with this "Path to Abundance Program." Step 8 demonstrated the three areas where money is submitted to keep the cycle of cash flowing into your life rather than away from you. How do you utilize this knowledge to bring cash into your world? There is a simple system that will allow you to pay off debt while at the same time increase your savings account balance. It is called the 60/40 Principle. It is the system that I used to get my family out of debt and eventually we moved from being middle class to millionaires over a 7 year period. Here are the basics:

This concept is the main rule that governs the flow of money in our lives. If you implement the 60 / 40 principle on any money you receive, you will immediately see your savings account start growing while your debt load decreases. If your debts are great, start only with money that is not part of your income, such as birthday money, rebates, unexpected cash from part-time employment, your change jar, your bonus from work, a tax refund check, whatever; you get the idea. You allocate money in this way by the 60 / 40 principle:

  1. 60% you live on. This goes into your main checking account.

  2. 10% goes into a long-term savings vehicle (IRA, 401k, Keogh account, solo 401k) for retirement. If you don't currently have a retirement account of any kind open two savings accounts at your bank. (One for long term and one for short term savings)

  3. 10% goes into a short-term savings account (local bank or a money market account) for use in those occasional large-scale expenses (new tires) and emergencies (the water heater explodes).

  4. 10% is tithed to a church or secular charity that is in line with your purpose. This is your ''rent'' for occupying space on the planet.

  5. 10% is pure philanthropy. That's right, you just give it away for the benefit of the community at large. This primes the pump so that the Universe starts sending wealth your way.

Once you have retired your debts, you apply the 60 / 40 principle to all your money, including your income, to keep money flowing in your life. Should you have any questions or comments please post them. I'll do my best to answer you quickly. Next week will be the final step to the Path to Abundance. Then we will move on to Curing Your Cash Crisis....stay tuned.

Monday, May 25, 2009

Happy Memorial Day! A Thank You to all the men and women who serve their countries.

I have to pause for a moment in our "Step to Abundance" Program to thank a few million people! Yep, that's right. Today is Memorial Day in the US and, to me, that means a day to reflect on the millions of people that have died throughout history fighting for what they believed in. I know that I was born an American, but I have really always considered myself a Child of Earth. I've always seen the world as my family and so it is sometimes hard for me to limit my love, consideration and reflection to only one country. Maybe this is due to the fact that I spent most of my youth outside of the United States of America. My dad was a Seabee in the Navy and so I got to be in many, cool countries growing up.

Because of this, I have a warped perspective (as some have told me). I see the world as my family and have an irritating habit (to some) of not using the "appropriate" terms of "us-and-them" correctly. You see, we live on a tiny rock in space. We are free falling through said space and the one major thing that keeps us all together is the gravity of the Sun. (You KNEW I was going to have to bring Science into this a wee bit!) When you see the pictures of our beautiful planet hovering is a sea of black, you can't help but be inspired by the fragility of it and the desire to keep it beautiful.

Happy Memorial Day to all the men and women who serve their countries at great sacrifice to themselves and their families. Know that I take a few moments today and think about the shear number of people that really means. A special "thank you" to my dad, Jim, Nina, John and Erica. I love you guys.

Wishing all of you a safe and inspiring Memorial Day,


Tuesday, May 19, 2009

Step 8 to Abundance: Understanding the Flow of Money

Okay, you've been working on your eulogy. You've got a vision for "why" you are saving money and digging yourself out of debt at the same time. You have purpose. And lastly, you have started tracking your expenses. Now, comes the time to pull all this together. Time for you to put the Flow of Money into perspective.
One reason money may have not been working well for you is due to your ignorance of how it works or "flows" in and out of your life. Don't worry, this is NOT something they teach in any school. As important as the Law of Attraction and the Flow of Money are these principles are so basic, most folks don't give them any thought until their money issues reach up and bite them!
Money is not linear. It does not flow like a stream from the mountains to the plains in a fairly downhill line. It is circular. Money moves in a HUGE circle. So large, in fact, that most of us don't comprehend the size of the circle until we are actively engaged in making the circle move faster for us.
Here is how it works: the flow of money is split into three large sections that move around our lives in a curved path.

  1. The Living Arm of money is the path most of us know about intimately. It is where all the expenses are located and it usually takes up 110% of our income. Yep, we spend beyond our means in this category.

  2. The Saving Arm of money is the least known path for Americans. We really stink at saving money. The Chinese and Japanese so have us beat in this area! Of the entire US Population, only 2% saves money. Yikes!

  3. The Giving Arm of money is actually well done by Americans. We are a very giving country, but the reason we don't benefit like we could by this movement of money is due to our inconsistency of giving. We donate here, there and everywhere, but in a very sporadic way. This does not help keep the flow of money going. Consistency is the key here.

To get money moving in your life you need to have cash flowing to all three arms of money at the same time. That is why it is impossible to pay off your debt first and THEN save money. You must save money and pay off your debt at the SAME time.

Now that you know how money flows, you'll be able to use that knowledge to funnel cash into the areas of your life that will bring a return. The next post will deal with the actual mechanics (read: details) of how to make that happen. Step 9 to Abundance is the 60/40 Principle!

Stay tuned!

Monday, May 18, 2009

Step 7 to Abundance: Using The Law of Cause and Effect for Positive Purposes

This principle that the Universe will fill the Voids we create in our lives, and do so in kind, is well known.  It goes by many names and is said in various ways.  You’ve probably heard most of these depending upon your cultural or religious background.  Some alternate versions are:


“The Law of Cause and Effect”

“The Law of the Harvest”

 “What you sow, that you shall reap.”

 “What goes around comes around.”

“Birds of a feather flock together.”

“To him that has, more shall be given.”

“Like begets like.”

 “Do unto others as you want them to do unto you.”


Despite the near-universal acceptance of this well-known law, people still have difficulty implementing it when they need something or when they see that others are in need. When you’re serving the needs of others it seems that the Universe goes to work overtime to get you what you need so that you can succeed.  Yes, you still have to do your part and work like crazy while you move toward your goal, but you have to do that anyway, right?  So why not rope the Universe into helping you out as well? Use the Law of Cause and Effect to do good in your particular corner of the world. How do you do it? Easy. What you give away will come back to you, just like a boomerang. (We can go into the physics of that in a later post!)

  • If you live in fear of starving, give food away (I have a family member that has 25# sacks of rice under her bed because not having enough food is one of her issues. I've learned so many tricks of how to store food in unconventional ways from this woman!

  • If you are afraid of being homeless, offer your house as a place to stay to someone in need.

  • If you think you worry about not enough clothes for yourself or your children, give away clothes.

  • Lastly, if you really want more money in your life, guess what? That's right. Start giving it away. Give as much away as you can without straining the budget for rent, food, tuition and insurance payments. You get the idea. There is money in your life that you can give away without putting your family out on the street. If this is NOT the case...if you are really in that dire situation where you can't even afford food, then get thee to a food bank and start receiving aid. Why? You need to swallow the pride and accept help so that you can get to where you are more stable financially. Then, and only then, can you move into abundance. I'll rant and rave more on this topic in a later post.

Remember what the late Sam Walton (co-founder of WalMart) told me about the secret of success in business is to replicate yourself.  This principle holds true for money as well.  Sure, the Universe isn’t one of your employees, but so what?  A helping hand (or whatever the Universe provides) is still a helping hand.  Consider what it is that you are afraid of and then fight that fear by giving what you need to others. It is a beautiful expression of the saying, "What goes around, comes around."

Saturday, May 16, 2009

Step 6 to Abundance (Part 2) Disposable Products True Cost

by Janine Bolon

Well, I was a bit surprised by the number of comments that flooded my email inbox, Facebook account and twitter direct messaging regarding this topic so we're going to chat about it for a bit longer.

First off, please, please everyone stop beating yourself up, okay? Stop with the guilt and self-flagellation on this. We are all here learning how to become financially independent. You are going to make mistakes, have challenges and meet resistance (both internally and externally) as you move along this road to debt-free living. Here is a sample of some of the comments made by folks that demonstrates many of the emails I've received.

"I know I waste money on paper towels. I'll go forever, not buy any and then get desperate and buy some. My kids and hubby go through them so fast that I then stop buying them again. I just need to go out and buy a bunch of dishtowels. Thanks for the reminder."

"I'm willing to do without paper towels, just don't mess with my toilet paper budget."

"Please, please don't ask me to give up my Charmin! I don't want my wife to read your post."

I find it funny that so many folks immediately start thinking about toilet paper whenever I mention disposable products! LOL. As one reader said, she'd tried to save money by having her family use the old Sears catalog trick, but they rebelled. (heavy tongue-in-cheek here!) Then the next item on the list of questions from readers was, what did my family use two-ply paper or one ply. I was inundated with questions about toilet paper. I had several husbands (3 to be exact) email me and beg me NOT to tell their wives about the costs because they have preferences for their bathroom tissue and they can't stand the generic brands. Toilet paper, toilet paper, toilet paper!!!

Look, this is the thing folks. Don't worry about what brand you use of ANY disposable paper, plastic or cleaning product. Just know the amount of money that you are throwing away on a daily basis. Then make a decision as to the cost/benefit ratio. Is it worth it to you to have a specific brand of toilet paper? If the answer is yes, well then buy it...you have my permission. LOL.

Make the sacrifices that you can comfortably live with and then save money somewhere else in your frugal life. There are thousands of ways to save money in this tightwad lifestyle. Use the other 999 ways to save money and stick to buying the bathroom tissue that is your favorite! Yikes! I had no idea that we would open up such a can of worms on this tip. Although, I thank every single one of you for emailing me. By the way, my husband totally agreed with you guys! DON'T mess with a man's favorite bathroom tissue. We're treading on sacred ground here. (Sorry, but I can't keep laughing from the shear PASSION this tip unearthed!) Your many emails let me know that you were reading the blog and that is good. Keep reading and you'll learn more than just money tips, you'll learn the mindset that keeps you walking the path to financial freedom.

Okay, now let's talk about all the other disposable products that are used in common households, not just the passionate issue of toilet paper. LOL. (Sorry, I'll try not to giggle anymore, but the response really has me giddy. It was so unexpected.) As I run through the list, just see which ones you can really do without and which ones that you make a goal to eliminate from your household budget. Alright? No panic attacks here. Remember this frugal life is all about saving money in places that won't make you feel deprived!

  • Paper towels - buy kitchen towels and store a whole STACK under your sink for daily use.

  • Napkins - buy cloth and launder

  • Plastic flatware - buy a BUNCH of flatware from the thrift store for pennies and take that with you on your outings, picnics and potlucks. If it is lost or left, no biggie.

  • Paper/disposable cups - again, the thrift store is a treasure trove of coffee mugs, unwanted tea cups and glassware. When we picnic out or go to potlucks my family wraps our drinking dishes in those linen towels from the kitchen. We've not had a breakage yet. Now, be sensible...around the pool or on the beach...of course, use reusable plastic cups.

  • Cleaning wands, sweepers and other house cleaning disposable products - I tried the new Clean-all-dust-mop-thingy when it first came out because I had a store coupon and I bought it on double coupon day and it only cost me $5 instead of the $20 it was going for. I could also write it off as a business expense because I was testing it for my "readers." Well, that thing DID NOT clean as well as my dust mop that has the removable cotton head that I just throw into my washing machine. Actually, it left stuff behind that my other dust mop was able to pick up. Really look at your housecleaning goodies, how many now languish in the back closet never being used after you realized that your broom did just as well, thank you, and doesn't cost you "pennies" every time you use it? Get rid of them and clear out that closet.

  • Trash bags - when we moved into our current house I went to the thrift store and bought bathroom sized trash cans for various rooms of the house. I even use the little bathroom trash can for my kitchen. I do this so I can use plastic bags given free at the store as liners. Sure, sure...I do use canvas bags for shopping, but when my trash can liners run low, I'm using the freebie bags. Now, I have a few things many people do not. Colorado is very big on the whole GO GREEN thing and we have an amazing recycling program here in Boulder County. Our curbside trash can is 1/2 the size of what you normally see! No lie. See the picture below. Also, every family has a variety of different trash and maybe this system won't work for you. However, it is just another way to save on a normal expense. There are ways to creatively get around most expenditures. Why did I ever come up with this? Well, it was when I was pregnant with kid number four. I couldn't lift the kitchen sized trash bags when I was as big as a whale. My husband traveled a lot and my other kids were also too tiny to handle the job. My answer...use tiny trash cans and smaller bags. Then I could make multiple trips to the trash, but hey, I could at least LIFT the silly thing. That's when it struck me that I was also saving money.

I hope this helps you out. Continue to do little things every day to keep your life simple and frugal. Give up the things you can, buy generic when you can and purchase the items that make a difference in your life. No guilt here. Just be conscious of what your buying and how much life energy it costs you. Good luck and, guys, keep those emails coming. I'll try to protect you from an overzealous wife. Remember, she just want you to retire early!

Thursday, May 14, 2009

Step 6 to Abundance: Examine Your Use of Disposable Products

by Janine Bolon

Sometimes you just have to change your buying habits in order to get the best value for your money. I had one client, Linda, tell me that she was having difficulty figuring out where she could cut corners in her expenses. After two months of tracking, she came to my office and worked through her monthly expense sheet. I asked her about her paper towel use. Linda would only buy one particular brand and she knew exactly how many rolls she went through a week. I showed her that she was spending $520 a year on paper towels alone. It looked like this:

4 rolls per week @ $2.50 each = $10 a week x
52 weeks per year = $520 annually

She was appalled! She said she could afford to buy a new dishwasher for that amount of money! This gave her the motivation to stop using paper towels. Immediately she went out and purchased a bunch of inexpensive linen towels. The initial investment was $12.64 for 20. Even with laundering costs she knew that she was saving huge amounts of money by not using paper towels anymore.

Look around your house and determine what behaviors you have with disposable products. See them for what they really are...money down the drain. Don't let the commercials or the marketing fool you...disposable products are not THAT more convenient to make me give up on financial independence by throwing money away!
Please remember this one important fact, the difference between the middle class and millionaires is that wealthy people are always thinking about what they can do to create their financial independence.

Wednesday, May 13, 2009

Step 5 to Abundance: Making a Price Book for Buying Groceries

by Janine Bolon

This is a wonderful tool to use to immediately and drastically decrease your family’s burn rate. You will see a pronounced difference in your monthly expenses, specifically your grocery bill, by using this tool then by any other means that I can recommend.
But it requires some really specialized, high priced equipment. What you will need is a three-ring binder. Then you can go out and buy an A to Z index to put in it – or get really frugal and make your own. And then fill the binder with three-hole punched notebook paper. The last item you will need is a pen or pencil. (Okay, I was kidding about the high priced equipment.)

What you are going to do is create your own price book. Amy Dacyczyn was the first author I read that described this system. Invest the 15 minutes a week required to get this program up and running and you will have a huge return on the time spent. Or, as we frugal types like to say, you will achieve a very high hourly wage for your effort!

The first thing you do is sit down with your ring binder (price book) and write down the most frequent items you buy and the prices that you normally pay off the top of your head. If you are like most of my clients, you will have no idea what you pay for most of your groceries. The next thing to do is to grab your store advertising circulars. Most folks get these in the mail or have a spouse or friend pop by the store on the way home to pick up the week’s circulars. Look over each circular and put down the sale prices of the items that you would buy that week; the most highly discounted items (the “loss leaders,” or items sold below cost to lure you into the store) and thus the best buys will be on the front and back pages.
For my family, we’re always looking for milk to hit a sale. My kids know that we won’t pay over $2 a gallon on milk. So each week we scan the circulars and find milk on sale at one of the four grocery stores we have in town. If it isn’t on sale that week, we don’t buy it. The longest we have ever had to go without milk was two weeks. Because of our price book, I learned that our stores have milk on a two-week sale cycle. I buy enough milk to last us through the two weeks as we wait for the sale to come around again. You can do the same thing with eggs, bread, bananas, or any other staple that you can name. You just have to do a few minutes of homework each week to keep your price book up to date.

Curing Your Cash Crisis...Ask Questions, Get Answers!

Greetings, Friends of Mine and Fans of Cash!

In response to those of you clamoring for me to write another book explaining the uses and abuses of money, the time has finally come to answer your pleas! The new tome is going to be called Curing Your Cash Crisis: Dealing with the Emotional Side of Money (or something like that).

However, I refuse to write this book in a vacuum. I want input from all my readers, followers, and fans, telling me what it is that you want to know. As of June 1st, SmartCents will be launching a new website that will post each chapter of the new book as I write it. On that site, you will have the opportunity to discuss each chapter, ask questions of me, and demand that I answer them within the pages of text. I will answer any question you have about money as long as you don’t ask me how to invest your savings! (I’m aware of how to make and use money, but I have no certification in Financial Planning so I can’t “go” there with you.) However, what I CAN do is answer all the other hundreds of basic questions buzzing through your brain!

What’s the bonus? For anyone who either asks a question that I can include in the new chapters or makes a constructive comment in the discussion section of the site, I will make sure that you receive a free electronic copy of the final book. That’s right! Not only do you get to comment and review each chapter as it comes out, thus helping you to get started digging out of your own personal economic recession, but you will be helping me to produce a volume that can help as many people as possible to understand the emotional traps that money matters always seem to throw our way.

Isn’t this the coolest thing? I am so excited to be able to open up this opportunity to the whole frugal community.

What do you need to do? Mark your calendar for June 1st so that you are sure to pop over to http://www.curingyourcashcrisis.com/ to review the first chapter of the book. It will be posted as of midnight on that date. There will be buttons on the page that will allow you to comment or ask questions; I and my editor(s) will make sure that the answers to the most universal and helpful questions will appear somewhere within the final book.

Just one word of caution. This book HAS to go to publication by the end of the summer. That means we only have through the end of August to play with the concepts and get all the data needed to fill its pages.

If you’ve ever had the desire to help write a book, now is your chance to get your feet wet. Come join the party and have a good time with the rest of us. See you on June 1st!

Wishing you much abundance,


Friday, May 8, 2009

Step 4 to Abundance: Tracking Down those Coins!

by Janine Bolon

Now that you have a purpose for becoming wealthy that isn't just a murky "to be rich," you can move on to making the necessary behaviorial changes that will stimulate more cash flow as well as help sharpen your focus on what you really want out of life!

It is time to start Tracking Your Expenses and Income.

Go ahead, roll your eyes and groan! All my clients and students do when I hit this stage of the lifestyle. Everyone thinks that it is SUCH a pain to track their money. Guess what? I'll let you in on a secret. I have yet to meet a millionaire that DOESN'T track their money. Seriously. Since my family became wealthy I've met a lot of other wealthy folks and I've asked them point blank,

"Hey do you track your expenses?"

"Of course!" is their response and they look at me like I have three heads.

Why? Because it is a basic principle. If you want to become wealthy so you can do what you want to do, then you have to know where your cash is going and where it is coming from. True, many millionaires have other people track their cash for them. They pay them for this service so they can get on with doing their particular missions in life.

I have first hand experience with this because in the early 90s I worked for a retired CEO of the Johnson & Johnson corporation. He was a man worth over 40 million dollars and I had the good fortune of learning from him how the rich view and handle money. It was a life lesson I never forgot because his habits were so drastically different from anyone I had ever met.

Every morning when he would walk into his office and take all the receipts of the previous day's expenditures out of his wallet and put them in a basket on my desk. At that point I would enter them into a spreadsheet under various categories. Once a week I would print off a summary sheet and he would look it over on Friday as he was in his planning meeting for the next week.

Once a month I would print a larger summary and he would look it over and discuss it with his spouse. She, too, had her own report and the questions I would hear them ask one another were like these:

  • So, how did we do this month, honey?

  • What unexpected expenses did we have this month? (You will learn as you do this activity that there is NEVER a normal month and there is ALWAYS an unexpected expense!

  • Are we happy with the way we spent our money?

  • Is there anything we need to change or save up for?

  • Do we want to do anything different?

In these meetings there was no judgement of one another as each read through their list and studied the money flow. Why? Because they both wanted to spend their money in ways that moved their purposes forward. They were heavy into philanthropy. Any money they spent on themselves meant less money for their favorite charities (they had 3 they started and funded).

They enjoyed their money. They had nice cars and they went on vacations, but the focus of their money was funding their charities. They made sure what money they did spend on themselves was in self-education/improvement. This millionaire once told me, "Yeah, I finally bought myself a Cadillac. I've wanted a Cadillac since I was 15, here I am 62 years old and I got it yesterday! Do you want to see it?" I laughed. How could I resist? This guy could have purchased any car he wanted for years, but he waited until he had all of his other priorities taken care of before he handed over the cash for a luxury. It still makes me smile when I think of that afternoon.

The point to tracking expenses is simply this...know where your money is going. Right now the reason you are so fustrated with your life and you feel so out-of-control is due to the fact that you have NO idea where your money goes. You work and work and work and at the end of the month you have NOTHING for all your hard efforts. No wonder your discouraged! I don't blame you!

So, come up with a very EASY system for tracking your expenses. Remember why you want to become rich, remember that you have a purpose for your life that is more than just being comfortable. The Universe wants to use you for making this world a better place. You may not know EXACTLY what it is you are going to be doing, but you know that the money that is coming to you is for a greater good. So, track those coins, track the money that is coming into your life and you will watch as your expenses decrease and your savings increase. You will gain control of your money and at the same time you're life will start to make sense in a whole new way.

Keep up the great work and do stay in touch. Let me know how you're doing after 2 weeks, 1 month and then 3 months. Those are the biggest changes that happen for folks. After 3 months you'll be so sold on the system you'll continue tracking coins for life!